Peter Costello urges Ken Henry to hasten NAB exit

Peter Costello has piled pressure on Ken Henry to leave NAB early, saying it’s not appropriate he appoint a new CEO.

Ken Henry (left) plans to stay at NAB until a replacement is found for CEO Andrew Thorburn (right). Pic: David Geraghty

Future Fund chairman Peter Costello has piled pressure on outgoing National Australia Bank chair Ken Henry to leave early, saying his plan to stay to appoint a new chief executive is not “good practice”.

Mr Costello said the appointment of a new chief executive should be left to a new chairman.

Both Mr Henry, the former Treasury Secretary to Mr Costello when he was treasurer, and chief executive Andrew Thorburn last week announced their resignations after royal commissioner Kenneth Hayne questioned their ability to recognise the cultural changes needed at NAB.

While Mr Thorburn will depart by the end of the month, Mr Henry says he will stay on until the appointment of a new chief executive.

But Mr Costello said today: ”If the NAB was managing itself well, the chairman would go first.”

“A new chairman….would appoint the CEO,” he said.

“I don’t think it’s good practice to have an outgoing chairman to appoint a new CEO because the first thing any CEO coming into the NAB is going to want to know is who is the chairman that they are going to be working worth.

“So they both took responsibility. I am not sure they have handled the transition well.”

National Australia Bank interim chief executive Phil Chronican last week said it was a “very difficult” practice to have both the chairman and chief executive leave in short succession, and that was one of the reasons Mr Henry was sticking around.

“We’ve got a lot of work ahead of us and it would have just been, I think, negligent of the board not to have had the opportunity to have Ken stay on and play a leading role in that,” Mr Chronican said.

Mr Costello’s comments are the strongest by an investor in the banks since the royal commission findings were released last week.

Mr Costello is the former Coalition treasurer who appointed Ken Henry as treasury secretary in 2001. Mr Henry survived the change of government in 2007 and helped the Rudd administration steer Australia through the global financial crisis before leaving in 2011 and Joining NAB.

But Mr Henry’s reputation has been dented by his appearance at the banking royal commission, where he admits he “did not perform well”, and by Mr Hayne’s criticisms of the NAB leadership.

Mr Costello also revealed the Future Fund voted against NAB’s remuneration report at last year’s annual general meeting to send a “pretty clear message” the way the bank was paying its executives was not appropriate.

Mr Costello said the record 80 per cent vote registered against NAB’s remuneration plan sent “a big message -- a huge message” to the company’s board, as he questioned how Mr Henry let shareholder discontent get so out of hand.

“I don’t think any sensible director would ignore that…most wouldn’t let it get to that stage. You’ve got to ask what they were thinking,” Mr Costello said.

“We have been voting against what we regard as inappropriate remuneration structures. (NAB) was a very overwhelming vote on their remuneration structure. We think that remuneration should reward a job well done, but conversely there should be pay at risk,” he said.

“I think the royal commission was a good exercise in highlighting bad conduct -- charging people for services that wasn’t rendered; in some cases charging the dead; in some cases not putting trustees obligation as paramount. I don’t know if any charges will come out, but it’s possible,” he said.

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